M/s DN Das & Co, Bhubaneswar V. ITO, Bhubaneswar

ITA 31/CTK/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4462 (ITAT-CUTTACK)
• Duration Of Justice: 2 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 08-04-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 14-01-2011
• Court: TRIBUNAL
• Department Lawyers: J KHANRA
• Assessee Lawyers: N PANDA
• Keywords: Application of stay
• Section: 44AD; 143(3); 144

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , S HRI K.S.S.PRASAD RAO , JUDICIAL MEMBER / I.T.A.NO. 03 1/CTK/2011 STAY PETITIONNO.011/CTK/2011 / ASSESSMENT YEAR 2006 - 07 M/S.D.N.DAS & CO, PLOT NO.1503/106/17, ACHARYA VIHAR,BHUBANESWAR 751 022 PAN: AAJFM 7347 M - - - VERSUS - INCOME - TAX OFFICER, WARD 2(2), BHUBANESWAR. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI N.PANDA, AR / FOR THE RESPONDENT: / SHRI J.KHANRA, DR / ORDER . . , , SHRI K.K.GUPTA, ACCOUNTANT MEMBER. THIS APPEAL FILED BY THE ASSESSEE AGITATES THE ACTION OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) IN CONFIRMING THE ENHANCEMENT IN THE INCOME OF THE ASSESSEE BY COMPUTING THE NET PROFIT FROM CONTRACT WORK AT 8% WITHOUT ASSIGNING IN ITS ORDER REASON WHICH WAS PARTICULARLY ALSO LACKING IN THE ASSESSMENT ORDER AS WELL. A STAY PETITION HAS ALSO BEEN PREFERRED BY THE ASSESSEE APPELLANT PRAYING FOR STAY OF DEMAND OF THE TAX ON INCOME SO COMPUTED BY THE A.O. 2. THE BRIEF FACTS PERTAINING TO THE ISSUE ARE THAT THE ASSESSEE DERIVES INCOME FROM EXECUTION OF WORKS CONTRACT IN EAST COAST RAILWAYS AND SUPPLY OF WATER PURIFIER TO GOVERNMENT OF ORISSA. IT FILED ITS RETURN DECLARING INCOME AT 2,04,230 WHICH WAS SCRUTI NIZED UNDER THE PROVISIONS OF SECTION 143(3) AT INCOME OF 6,12,360. THE ASSESSING OFFICER CONSIDERED , IN ABSENCE OF PROPER BOOKS OF ACCOUNT AND VOUCHERS, THE NET INCOME OF THE ASSESSEE TO BE COMPUTED AT 8% OF THE GROSS RECEIPTS AMOUNTING TO 1.36 CRORES. AGGRIEVED, I.T.A.NO. 011/CTK/2011 STAY PETITIONNO.011/CTK/2011 2 THE ASSESSEE APPEALED BEFORE THE FIRST APPELLATE AUTHORITY. IT WAS EXPLAINED TO THE LEARNED CIT(A) THAT THERE WAS NO BASIS FOR THE ASSESSING OFFICER TO REJECT THE BOOK RESULTS WHICH WAS DULY AUDITED INSOFAR AS THE REASON FOR HIS RESORTING TO ES TIMATE WAS JUST BECAUSE THE GROSS RECEIPTS DECLARED BY THE ASSESSEE DEALT WITH THE TDS CERTIFICATES CLAIMED IT WAS NOT POSSIBLE TO RELY ON THE NET PROFIT DECLARED BY THE ASSESSEE AS PER THE AUDITED ACCOUNTS. THE LEARNED COUNSEL VEHEMENTLY ARGUED THAT THE L EARNED CIT(A) THEREAFTER HELD THAT THE ACTION OF THE ASSESSING OFFICER BEARS NO INFIRMITY WITHOUT POINT OUT AS TO HOW THE BOOK RESULTS COULD BE NULLIFIED. FOR THIS PURPOSE, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED A PAPER BOOK WHICH INTER ALIA INCLUD ES THE COPIES OF BALANCE SHEET AND PROFIT & LOSS ACCOUNT FOR FOUR AYS INCLUDING THAT OF THE IMPUGNED ASSESSMENT YEAR WHEREIN THE REVENUE HAS BEEN ACCEPTING THE NET PROFIT DECLARED BY THE ASSESSEE RANGING FROM 4.8% TO 5%. HE ALSO HAS ENCLOSED THE COPIES OF THE WORKS CONTRACT AGREEMENT BETWEEN THE ASSESSEE AND EAST COST RAILWAYS, WHICH BY NO STRETCH OF IMAGINATION LEAD TO A FINDING THAT THE ASSESSEE HAD SUPPRESSED INCOME ON THE BASIS OF WHICH THE ASSESSING OFFICER WITHOUT CONTROVERTING THE SAME ENHANCED THE I NCOME. HE HAS ALSO RELIED ON THE DECISION OF THE ITAT, CUTTACK BENCH IN THE CASE OF JAMI RAVI SHANKAR V. ACIT IN ITA NO.205/CTK/2010 DT.15.11.2010, WHEREIN THE TRIBUNAL WAS PLEASED TO HOLD THAT ESTIMATING OR ENHANCING A HIGHER RATE OF RETURN ON GROSS RECE IPTS HAS TO BE SUPPLEMENTED WITH SPECIFIC FINDING OF THE ASSESSING AUTHORITIES WHICH COULD AT BEST BE UNDER THE PROVISIONS OF SECTION 144 WHICH IN THE CASE OF THE ASSESSEE HAS NOT BEEN DEALT WITH AT ALL. THE ASSESSING OFFICER HAD ACCEPTED THE NET MARGIN AT 5% EVEN AFTER ON THE BASIS OF COMPARISON HAVING SIMILAR SITUATION AND BUSINESS, THE ASSESSEE COULD HAVE SAID TO HAVE CLAIMED HIGHER EXPENSES. HE, THEREFORE, SUBMITTED THAT A MERE PERUSAL OF THE FINANCIAL STATEMENT AND THE FACT THAT THE ASSESSING AUTHORITI ES I.T.A.NO. 011/CTK/2011 STAY PETITIONNO.011/CTK/2011 3 ARE GUIDED BY THE PROVISIONS OF SECTION 44AD AND 44AF WHICH ARE TO BE CONSIDERED ONLY ON THE BASIS OF ASSESSEE IS NOT MAINTAINING BOOKS OF ACCOUNT OR THEIR TURNOVER DOES NOT EXCEED THE CERTAIN LIMIT THAT AS TO BE ESTIMATED AT 8%. LAW ALSO PROVIDES THAT IN CASE THE LOW RATE IS CLAIMED THEN THE BOOKS OF ACCOUNTS HAVE TO BE MAINTAINED WHICH NEITHER OF THE LOWER AUTHORITIES DISPUTED. HE PRAYED THAT THE INCOME RETURNED BY THE ASSESSEE MAY KINDLY BE DIRECTED TO BE ACCEPTED. 3. THE LEARNED DR SUBMITTED THAT THE BOOKS OF ACCOUNT WERE NOT PRODUCED AND IN VIEW OF THE INVOKING OF PROVISIONS OF SECTION 145(3), THE ASSESSING OFFICER ESTIMATED THE INCOME AT 8% AFTER GIVING DUE CONSIDERATION FOR THE EXPENSES CLAIMED THEREFORE WAS CONFIRMED BY THE LEARNED CIT(A). 4. WE H AVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ON OUR CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES, WE ARE INCLINED TO HOLD THAT THE AUTHORITIES BELOW HAVE NOT BROUGHT OUT ANY SPECIFIC DEFECT IN THE BOOKS OF ACCOUNT O R FINANCIAL STATEMENT DULY AUDITED TO PROMPT THEM IN RESORTING TO ESTIMATING RATE OF RETURN @8% OF THE GROSS RECEIPTS. HAVING VERIFIED THAT THE GROSS RECEIPTS DEALT WITH THE TDS CERTIFICATE AND THE ASSESSING OFFICER GRANTING CREDIT WITH THE TAX SO DEDUCTED WAS NOT JUSTIFIED IN ESTIMATING THE INCOME AT HIGHER RATE WITHOUT POINTING OUT ANY MISTAKE IN THE FINANCIAL STATEMENT OR IN THE BOOKS FO ACCOUNT WHICH THE AUDITORS HAD VERIFIED AND CERTIFIED WERE AVAILABLE TO THEM FOR VERIFICATION, THEREFORE COULD LEAVE N O ROOM FOR THE AO TO ESTIMATE 8% WHICH HAS TO BE CONSIDERED ONLY WHEN THE TURNOVER IS BELOW SPECIFIED BENCH MARK AND MAINTENANCE OF BOOKS OF ACCOUNT ARE NOT THERE. WE HAVE PERUSED THE FINANCIAL STATEMENT AND AUDIT REPORT AND DO NOT FIND ANY CONTROVERTING M ATERIAL TO HOLD THAT THE ASSESSING OFFICER WA S JUSTIFIED IN ESTIMATING THE INCOME AT A HIGHER RATE. THE DEPARTMENT HAS ACCEPTED THE RATE OF RETURN FOR I.T.A.NO. 011/CTK/2011 STAY PETITIONNO.011/CTK/2011 4 THE EARLIER YEARS WHICH IS AN UNDISPUTED FACT AND THEREFORE, THERE IS NO REASON TO DEVIATE THERE FROM IN THE IMPUGNED ASSESSMENT YEAR. ACCORDINGLY, TH E ASSESSING OFFICER IS DIRECTED TO ACCEPT THE INCOME RETURNED BY THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. 6. IN VIEW OF OUR HAVING DISPOSED OF THE APPEAL, THE STAY PETITION FILED BY THE ASSESSEE BECOMES INFRUCTUOUS AND THE SAM E IS DISMISSED AS SUCH. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 13 TH APRIL, 2011 S D/ - S D/ - ( . . . ) , ( K.S.S.PRASAD RAO), JUDICIAL MEMBER ( . . ) , , (K.K.GUPTA), ACCOUN TANT MEMBER. ( ) DATE: 13 TH APRIL, 2011 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : M/S.D.N.DAS & CO, PLOT NO .1503/106/17, ACHARYA VIHAR,BHUBANESWAR 751 022. 2 / THE RESPONDENT: INCOME - TAX OFFICER, WARD 2(2), BHUBANESWAR. 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, [ ] SENIOR PRIVATE SECRETARY ( ), ( H.K.PADHEE ), SENIOR.PRIVATE SECRETARY.